Can You Draw The Accounting Equation On A T Account
Why To Draw The Accounting Equation On A T-Account?
You can draw the Accounting Equation on a T-Account easily if you know about the accounting equation. Firstly, we write the accounting equation and then we draw it on a t-account.
Assets = Liabilities + Owner’s Equity
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Left Side = Right Side
T-Account
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Left Side Right Side
Debit Side Credit Side
Assets = Liabilities + Owner’s Equity
Debit Credit Debit Credit Debit Credit
After preparing accounting equation on a t account or ledger account, we get the following points:
(i) Assets side is the left side of the accounting equation while liabilities & equity is the right side of the accounting equation.
(ii) Both sides must be equal in monetary value.
(iii) The left side of a t-account is called debit side while the right side of a t-account is known as credit side.
(iv) All the assets t accounts have both debit and credit side.
(v) All the liabilities t accounts and the owner’s equity t account have both debit and credit sides
(vi) The normal or positive balance of assets t account is debit and unusual or unfavorable balance is credit.
(vii) The normal or favorable balance of liabilities and owner’s equity accounts is credit while unusual or negative balance is debit.
So, it is better to record all of the Business Transaction from accounting equation to t-account to check the total of assets and total of liabilities and equity accounts balances more easily rather than use only accounting equation where a large number of transactions take place in the business working days.
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